LONDON — European stocks were sharply lower on Monday as the sell-off in global markets continues into the new trading week.
The pan-European Stoxx 600 index was down 2% by mid-morning with nearly all sectors in negative territory apart from utilities. Basic resources stocks — with their heavy exposure to China — were the worst performers on the index, with the sector down 5.8%.
The negative trade in Europe comes after Asia-Pacific markets fell sharply on Monday following a sell-off on Wall Street on Friday. Mainland Chinese indexes led losses. The Shenzhen component tumbled around 6%, while the Shanghai composite declined 5.09%.
Asian markets are also being buffeted by concerns over China’s Covid wave as the world’s second-largest economy struggles to contain its worst outbreak of the virus despite harsh lockdowns in its largest city, Shanghai. Over the weekend, Beijing warned that the virus has been spreading undetected for about a week.
Meanwhile, U.S. stock futures fell amid a four-week losing streak for the Dow Jones Industrial Average as investors assessed the likelihood of rising interest rates. Wall Street is also bracing itself for a stacked week of earnings, including reports from major tech companies such as Amazon and Apple.
Risk appetite has taken a notable knock with equities continuing to head south. News of partial lockdowns in Beijing as infection rates in the capital accelerate look to be focusing attention on the downside risks to growth even as developed world policymakers continue to wax hawkishly.
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In other news, Germany’s Ifo Institute reported Monday that sentiment in the German economy has stabilized at a low level.
The ifo Business Climate Index rose to 91.8 points in April, up from 90.8 points in March. This was due primarily to less pessimism in companies’ expectations, Ifo said.
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— CNBC’s Silvia Amaro, Sarah Min and Matt Clinch contributed to this market report.
